For owners of retail stores, restaurants, and other brick-and-motor businesses, your storefront is one of your most valuable assets. If you’re leasing commercial property, it’s important to know and understand the various types of commercial leases that are available. Some of the most common types of commercial leases include:
● Modified Gross
● Triple Net (NNN)
● Absolute Net
Each of these different types correspond to different landlord-tenant liability allocations for commercial lease pass through expenses.
There is no “standard” commercial lease, although some real estate industry associations have drafted their own standardized forms (which are often favorable to the landlord). Most real estate agents will advise you to consult a Texas real estate lawyer who can optimize the lease to protect and serve your business operations, and to create a secure and valuable asset for your company.
An experienced real estate attorney can help you identify hidden risks that are specific to your small business and your commercial lease. For example, the replacement insurance terms of a commercial real estate insurance policy may exempt coverage that could expose your leased business premises and your financial health to additional risks. Other more practical considerations, such as construction and build-out of the leased premises, signage, terms and enforcement of parking policies, lease assignment and transfer rights, and other issues should also be optimized for your specific operations, financing, and risk management structure.
Often, there are many players involved in negotiating a commercial lease. Typically, the landlord and tenant will each have their own real estate agents and attorneys. To negotiate a lease on the best terms possible, it’s important for everyone to work together, and for your commercial lease attorney to be involved early in the process – ideally before you sign a letter of intent (LOI). Prospective tenants often suffer the burden of additional expense, time, and effort when they sign a non-binding LOI that lacks “teeth” and provides no incentive structure to drive the commercial lease negotiation process.
Your commercial lease is a long-term investment with long-term obligations. Proactive effort to effectively secure your leased commercial property and to negotiate landlord-tenant liability will provide exponential benefits to the long-term success of your small business. The Blake Law Firm frequently provides Texas commercial real estate attorney services to business owners and advises purchase, sale, and commercial lease negotiation matters in Austin and throughout the state of Texas.
Disclaimer: This article is not legal advice and does not create an attorney client relationship. To reach the attorney responsible for this article please contact James Blake, The Blake Law Firm PLLC, 9442 N. Capital of Texas Hwy, Arboretum Plaza One Ste 500-181, Austin, Texas 78759. (512) 651-3930.